Cash-Only Practices: Medical Doctors Reconsider Their Options

Cash-Only Practices: Medical Doctors Reconsider Their Options

It’s not just chiropractors who are considering switching to all-cash practices. Managed Care is also losing its grip on medical practices.

Introduction

Cash-only (also called “direct-pay”) medical practices, in which doctors shun managed care contracts and are paid in cash by patients, are gaining adherents — admittedly slowly, but surely. And while there have been philosophical and logistic criticisms of the model, some of those are steadily breaking down.

One reason is that low insurance reimbursements, particularly from Medicare, are making it harder to meet practice overhead expenses. Another is that increasingly more doctors, particularly primary care physicians, seek greater control over their patient visits and patient relations.

“How do you create a practice model where your patients are your payers, where you get doctor and patient back into a real relationship, and where patients can trust in the way doctors work and how they do business?” asks Alan Dappen, MD, who has a cash-only solo practice in Vienna, Virginia.

Cash-Only: Making a Real Impact?

How many doctors are going the cash-only route? It depends on whom you ask.

“The cash-only movement is growing exponentially,” asserts Brian Ray Forrest, MD, an adjunct professor at the University of Carolina School of Medicine at Chapel Hill; President of the North Carolina Academy of Family Physicians; and founder of Access Healthcare, a direct-pay practice in Apex, North Carolina. “In the next 5 years,” he predicts, “25% of doctors will convert to a cash-only model.”

Formal surveys of doctors who have no managed care contracts tell a different story, however. “According to our 2010 Practice Profile Survey, taken from our active members, only 3% of respondents were practicing in a cash-only, direct-care, concierge, boutique, or retainer medical practice,” says Glen Stream, MD, president of the American Academy of Family Physicians (AAFP). That comes to fewer than 3000 doctors out of the AAFP’s 97,000-plus membership.

As the AAFP’s president, Stream has the opportunity to interact with a great many family physicians. Even though only 3% of AAFP members have opted out of managed care, are a far greater number considering it? “Absolutely,” he says.

The Center for Studying Health System Change in Washington, DC, has been tracking the number of doctors without managed care contracts since the mid-1990s. Ann S. O’Malley, MD, MPH, a senior researcher there, says that on the basis of periodic surveys the center conducts, the number of cash-only practices grew from 9.2% in 2001 to 11.5% in 2005, an increase of only 2.3%.

“Despite anecdotal reports that many physicians have dropped out of insurance networks, the vast majority of physicians — 87.6% — had managed care contracts in 2008, the year our most recent survey was published,” O’Malley observes.

Still, that would mean 12.4% of physicians are in some form of direct-pay practice. The Association of American Medical Colleges estimates that the number of US doctors now totals about 954,000. Could it be that 118,000 physicians currently accept only cash?

Criticisms of the Direct-Pay Model

The cash-only movement has its critics. They say that the direct-pay model would contribute to fragmented care; reduce a physician’s scope of practice to treating acute problems, because insured patients with chronic illnesses are less likely to want to pay out of network on an ongoing basis; and that chronically ill patients who can’t afford insurance tend to avoid routine preventive care.

“Patients opting for a full-retail doctor might delay getting care because of the cost,” notes Jeffrey J. Denning, a principal of the Practice Performance Group in La Jolla, California. “We see the same behavior in physicians. They don’t call their accountants and attorneys when they should because they’re going to be charged by the minute.”

Excellent Results for Some Patients

But that depends on the doctor, and his or her patients. Last year, for example, Forrest’s charts were audited by the Consortium on Southeast Hypertension Control, whose mission is to improve the disproportionate hypertension-related morbidity and mortality throughout the region.

On the basis of these audits, 32 cardiovascular centers of excellence were identified. Access Healthcare led the list. As a result, Forrest says, “the Centers for Disease Control and Prevention sent some folks up from Atlanta last year to see what I was doing right.”

By his own estimation, what Forrest does right does not stem from his being a good doctor. “It’s the model,” he says. “When you spend more time with patients — my patients get at least 30 to 45 minutes minimum, and a lot of them get an hour — you can really take time to fine-tune their medications and regimens. So the quality is a ton better, too.”

We run a holistic medical clinic that is cash-based. We are out-of-network with insurance and medicare/medicaid. People ask why we don’t accept insurance or government aid and honestly not only would we not be able to keep the practice open if we did, we also could not practice the way we feel is most beneficial to the PATIENT.

When the patient is paying up-front and directly for care you can really establish a trusting and positive relationship. The doctor also has the benefit of sitting down with the patient and talking through ALL of their issues/questions for 30, 45, even 60 minutes. You will never see our office function like a “normal” Dr.’s office where the doctor pokes his head into the room for 5 minutes because there are so many patients packed into one day that that is all the time they can spare. Who can make medical decisions and take a REAL patient history in 5 minutes?

This is the way QUALITY medical care is having to go. It is a sad reality but insurance just won’t pay (or pay WELL) for this type of care.